Patient-Centered Medical Home Simulation Model

Patient-Centered Medical Home Financial Modeling Tool

Patient-Centered Medical Home is an emerging strategy that augments fee-for-service consultation with coordinated care services provided by a physician-led team. Proponents believe this restructuring of primary care will improve patient access and outcomes, while reducing avoidable usage of higher-cost healthcare services.

Current fee-for-service systems do not pay the provider for time spent on activities such as coordinating care, tracking adherence and compliance, and ongoing patient communications nor do they offer incentives for improved patient outcomes. Thus the medical home model suggested approach to reimbursement is to provide the primary care clinic with three sources of revenue: (1) fee-for-service (2) per member per month capitation payments to cover non-billable services (3) incentive payments for improved quality and reduction in avoidable usage. The latter two sources are funded by the payer from anticipated improvement in patient outcomes, which results in less healthcare usage.

The goal of this tool is to help determine the conditions under which the medical home is financially sustainable. The model helps identify the appropriate levels of capitation, incentive, and resource investment for medical home services. Decisions are distributed between payers and providers, so it characterizes an equilibrium encompassing the strategies of both parties.

The model helps answer the following questions:

  1. What are the appropriate levels of per-patient-per-month payments and performance incentives?
  2. How much should the primary care provider invest in medical home services?
  3. How much improvement in patient outcome s is necessary to sustain the medical home?

The model uses a representative clinic designed using data from the Medical Expenditure Panel Survey provided by the Agency for Healthcare Research and Quality and from the Physician Production Survey provided by the Medical Group Management Association. The medical team consists of one physician and several RN/LPNs.


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